Visa And Mastercard Transactions Could Get More Expensive In The U.S.

By Adnan Farooqui, on 02/17/2019 08:23 PST

Ever wondered how card networks like Visa and Mastercard make money? They charge processing fees from merchants. They have to pay a small fee to the bank that issued the customers’ card while the customers’ bank pays a fee to the company operating the card network. As it turns out, Visa and Mastercard are looking to raise some of those fees.

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The Wall Street Journal reports that both Visa and Mastercard are mulling a rise in interchange fees on card transactions in the United States. The change is expected this April. Visa has already confirmed the upcoming fee increase.

The fees that Visa and Mastercard charge aren’t directly tacked on to whatever you’re purchasing in a given purchase. For example, you’ll pay the same $5 for an item whether you pay by cash or credit card.

The financial hit of a fee increase will be borne by merchants who pass it on to customers. The fees on transactions are very small individually but they quickly rack up for large merchants and thus this change could lead to customers having to pay higher prices because of the increased fees. The prices would go up even for those who exclusively pay by cash since these fees aren’t passed on to customers on a per transaction basis.